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INTERIM STUDY REPORT
Pension Oversight Committee
Representative Randy McDaniel, Chairman
Oklahoma House of Representatives
Interim Study 11-042, Representative Randy McDaniel
January 11, 2012
Pension Funding Issues and Sustainability
Tom Spencer, Executive Director
Oklahoma Public Employees Retirement System
tspencer@opers.state.ok.us
 Between 95% and 99% of the financial improvement in the Oklahoma Public Employees
Retirement System (OPERS) can be attributed to the passage of HB 2132. Oklahoma has a very
long history of granting ad hoc cost-of-living-adjustments (COLAs). This practice was so
consistent that beginning in the 1990s, OPERS began including a COLA assumption in the
calculation of the pension liability. Last session the legislature passed HB 2132, which
prohibits the state from granting COLAs unless the benefit is fully funded at the time of
authorization. As a result of this measure, the COLA assumption was removed, the liabilities of
the state pension plans decreased, and the funded ratios of the plans increased.
 The OPERS funded ratio increased from 66.0% to 80.7% between June 30, 2010 and June 30,
2011. The unfunded liability of the plan decreased from $3.2 billion to $1.5 billion over the
same time period. If all plan assumptions are met and the system collects at least 19.38%,
OPERS will be 100% funded by 2027. The system currently collects 20.0%.
 The funded ratio of the Uniform Retirement System for Justices and Judges (URSJJ) increased
from 81.3% to 96.3% between June 30, 2010 and June 30, 2011. The unfunded liability of the
plan decreased from $52.8 million to $9.2 million over the same time period. If all plan
assumptions are met and the system collects at least 29.36%, URSJJ will be 100% funded by
2027. The system currently collects 19.5%.
See OPPRS-URSJJ Handout (presentation a).
Representative Randy McDaniel, Chairman
Pension Oversight Committee
randy.mcdaniel@okhouse.gov
 The editorial published in The Oklahoman outlines the forthcoming balanced budget
amendment. Representative McDaniel discusses the relationship between balancing the state
budget and having groups ask for significant benefit increases.
 Representative McDaniel notes that the pension plans seem to have been excluded from the
balanced budget requirement, as groups continued to ask for and receive benefit increases.
 Actuarial reports provide a good gauge of the benefits promised and their associated costs.
Although markets and benefit levels may change from year to year, the actuarial reports
provide an assessment of what the state must do to pay for the pension systems.
 The theme of Representative McDaniel’s balanced budget amendment, as outlined in the
editorial, is that the state must pay for things. With respect to the pension plans, the state must
match what is provided and promised with what is put into the plans.

INTERIM STUDY REPORT
Pension Oversight Committee
Representative Randy McDaniel, Chairman
Oklahoma House of Representatives
Interim Study 11-042, Representative Randy McDaniel
January 11, 2012
Pension Funding Issues and Sustainability
Tom Spencer, Executive Director
Oklahoma Public Employees Retirement System
tspencer@opers.state.ok.us
 Between 95% and 99% of the financial improvement in the Oklahoma Public Employees
Retirement System (OPERS) can be attributed to the passage of HB 2132. Oklahoma has a very
long history of granting ad hoc cost-of-living-adjustments (COLAs). This practice was so
consistent that beginning in the 1990s, OPERS began including a COLA assumption in the
calculation of the pension liability. Last session the legislature passed HB 2132, which
prohibits the state from granting COLAs unless the benefit is fully funded at the time of
authorization. As a result of this measure, the COLA assumption was removed, the liabilities of
the state pension plans decreased, and the funded ratios of the plans increased.
 The OPERS funded ratio increased from 66.0% to 80.7% between June 30, 2010 and June 30,
2011. The unfunded liability of the plan decreased from $3.2 billion to $1.5 billion over the
same time period. If all plan assumptions are met and the system collects at least 19.38%,
OPERS will be 100% funded by 2027. The system currently collects 20.0%.
 The funded ratio of the Uniform Retirement System for Justices and Judges (URSJJ) increased
from 81.3% to 96.3% between June 30, 2010 and June 30, 2011. The unfunded liability of the
plan decreased from $52.8 million to $9.2 million over the same time period. If all plan
assumptions are met and the system collects at least 29.36%, URSJJ will be 100% funded by
2027. The system currently collects 19.5%.
See OPPRS-URSJJ Handout (presentation a).
Representative Randy McDaniel, Chairman
Pension Oversight Committee
randy.mcdaniel@okhouse.gov
 The editorial published in The Oklahoman outlines the forthcoming balanced budget
amendment. Representative McDaniel discusses the relationship between balancing the state
budget and having groups ask for significant benefit increases.
 Representative McDaniel notes that the pension plans seem to have been excluded from the
balanced budget requirement, as groups continued to ask for and receive benefit increases.
 Actuarial reports provide a good gauge of the benefits promised and their associated costs.
Although markets and benefit levels may change from year to year, the actuarial reports
provide an assessment of what the state must do to pay for the pension systems.
 The theme of Representative McDaniel’s balanced budget amendment, as outlined in the
editorial, is that the state must pay for things. With respect to the pension plans, the state must
match what is provided and promised with what is put into the plans.